Life insurance can protect families from struggling with money at a time when they already have enough to overcome. These insurance products create contracts between the policyholder and the insurance company, designating a lump sum death benefit to be paid out upon the death of the insured. Some products include Living Benefit riders that allow a portion of the death benefit to be utilized during the insured’s lifetime in the case of certain illnesses, disability, or long term care needs. This type of insurance lasts the lifetime of the insured and cannot be canceled as long as premiums are paid.
Whole Life insurance provides permanent coverage that never expires and combines a death benefit with a savings component. In whole life insurance, some of the money paid in belongs to the policyholder- even if they stop paying premiums. This is called the policy’s cash value. Whole life benefits also receive favorable tax treatment, making them a popular choice among those looking to intentionally grow cash value inside a plan. The savings component can be invested; additionally, the policyholder can access the cash while alive, by either withdrawing it for use or borrowing against it as needed.
Cash buildup should be reviewed periodically with an educated agent. Money built up inside a whole life plan can be transferred into an annuity, funeral trust, or alternate life plan via 10-35 Exchange form without creating a taxable event. Options to leverage cash value into other insurance products can be very important for a Medicaid recipient trying to stay within their state’s asset requirements. UAR can show you how to help low-income individuals retain their important health benefits and life coverage.
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